Rapid Response: What campus protests mean for business, w/Ken Frazier and Ken Chenault

0:00Scaling a business in the US can feel like a maze. Each state has its own payroll, benefits, and compliance rules, pulling your focus away from growth, which is why founders use Deal. Deal is the professional employer organization, or PEO, that gives you a dedicated HR expert, plus Fortune 500-level benefits for your team. The National Association of PEOs says businesses can grow twice as fast if they use one. So, if you're scaling, make it simple with Deal. Go to deel.com. slash MOS and get up to three months free. If you're in private capital, you understand that your next great deal starts with who you know.

0:41That's why over 3 ,000 firms trust Affinity, the CRM platform purpose-built for private capital. Affinity's relationship intelligence reveals your team's strongest paths to founders, investors, and decision makers using insights It's hidden in emails, calendars, and meetings. With powerful AI tools like Affinity NoteTaker and Deal Assist, you'll spend less time managing data and more time closing the right deals. Learn more at affinity.co slash marketplace. You know, I heard someone say, if you've read 10 books about the origin of today's situation in Palestine, all that qualifies you to do is to read another 20 books.

1:29I will tell you, Bob, that I think what we're seeing on the college campuses is a microcosm of what's happening in the broader society. Common ground will never be reached unless we go to higher ground and talk about the principles that unite us.

1:53that's ken frazier former ceo of merck and ken chenault former ceo of american express i wanted to talk to ken and ken who are both on harvard university's corporate board in the wake of college campus demonstrations nationwide over palestine and israel we dig into how and why the environment for ceos and other leaders of organizations has become politicized, and what the business community should glean from the tumult on campuses. It's an unfiltered conversation about some of the most controversial topics in America, including DEI, which is two of America's most prestigious black executives, Ken and Ken have intense and sometimes surprising perspectives on.

2:35I'm Bob Safian, former editor-in-chief of Fast Company, founder of The Flux Group, and your host. This is Rapid Response.

2:49I'm Bob Safian. I'm here with Ken Chenault and Ken Frazier, two iconic CEO leaders at American Express and Merck, respectively, now colleagues at investment firm General Catalyst. Ken and Ken, so great to have you both here together. Yeah, terrific. Great to be here. Thank you, Bob. After your previous appearances on this show, I've come to think of you as like the conscience of American business. You've talked about the role that business plays in society and the responsibility that comes with leadership. And during the pandemic and coming out of it, a lot of businesses took public stands on things.

3:25But recently, it seems like that suddenly CEOs kind of don't want to talk about anything. Do you have a sense about why that change happened? Is it because it's an election year? So I don't think it's just the fact that it's an election year, although the partisan political stakes are certainly higher in an election year. But I think as often is the case in our society, when we correct or overcorrect for something that's perceived to have gone too far, you move really far to the other side. And right now, I think that CEOs have seen enough examples of companies that have actually been punished for speaking out, such that the CEOs feel like they really ought to be careful in speaking about almost anything.

4:15I think it's important for all of us as business leaders to understand the concept that in our society, we are very divided people right now. But at the same time, our businesses depend on certain bedrock principles of our democracy and, frankly, of our free market in order for us to continue to be successful over the long term. The reason why there's so much investment in the U.S. market versus other markets is because things that we take for granted, like democracy, like rule of law, the enforcement of contracts, the peaceful transfer of power, if we don't support the principles that support not only business but also people, then we're likely to put ourselves in a situation where over time, the democracy that we enjoy today might gradually be eroded.

5:06We may come to a point where there are real concerns about what's happening to our democracy. And my advice is CEOs should be prepared. Under what circumstances do they think it would be necessary for them to speak out? And one would be, would they focus, if they really thought that our democracy was imperiled, would they speak out? I think CEOs should start thinking about that. Under what circumstances would they speak out and at least make a conscious decision of do they want to speak out or do they want to be on the sidelines? I mean, I can imagine when you raise that kind of an issue with CEOs that sometimes like they don't really want to think about it, right?

6:01Because those are hard questions to answer. They definitely are hard questions for people to answer. People have to ask themselves what their fundamental principles are. if in fact you're not willing to take a stand for something that is in your view a critical principle for your company your employees your customers society at large then that principle really is pretty much a preference not a principle are there things that either of you would have expected people or wanted business leaders to talk out about recently that they haven't Maybe, Ken Chenault, you want to go first. I think voting rights was an opportunity, and at least I think we were both gratified by the level of support that we had from business.

6:49But I would say, frankly, for me, post-January 6th, given what happened on the attack on the Capitol, I think that was a time for CEOs to speak out, to say that there is nothing more important for our democracy than to have a peaceful transition. I think it does come down to a couple of things. First of all, is it legitimate for those CEOs to speak to a particular issue? So as a former CEO of Merck, I felt like I had a particular reason to speak out about health equity issues because that was clearly relevant to Merck's business. We knew a lot about it, and it was congruent with the actions that we were taking as a company.

7:35So those issues are more relevant for me to speak out against about than other issues. Another issue, though, however, that I felt like I needed to say something about a few years ago was the Muslim ban. And that was because we had employees who couldn't get back into the country during that period of time. It's remarkable to me how certain phrases, D-E-I, E-S-G, have quickly become kind of dirty words. These are things that operate in the business climate, not in the political climate. You're both strong advocates for diversity, two of the most prominent black business leaders in America ever.

8:12Your careers represent what's possible when opportunity is open. Is that more questions now? Like, does it surprise you the way those terms have become ammunition in certain ways? This concept of linking the term DEI, that that is bad, I think is ludicrous. there are some programs in diversity and DEI that I don't agree with. But the reality is there are some strategies and tactics for a business that I don't always agree to. But I don't say, boy, let's not have a strategy, particularly when we have an objective that we want to welcome every type of person and we want to create an environment where people feel engaged and welcomed.

9:04So I think it's very dangerous that people are saying we need to get rid of DEI, but they're not, frankly, also saying, but let me be clear, here's our commitment to diversity. And I think there are forces who, in fact, are against giving people opportunity. And I think this is one where companies do need to assert that they have a commitment to supporting all types of people and giving all types of people an opportunity at their company. So I agree. I think the fight over the acronym is not where the real action is here. I think the real action is what is it going to require for us to be successful as businesses?

9:53And I would think most CEOs would agree to the following. It's important to get the best talent and to look for that talent wherever it might be, whether it's in the traditional places or in places that historically we haven't gone to find that talent. I think most people would agree that it's important that as we train and develop people, we do that in a fair way. As we measure and monitor their progress, that we do that in a fair way, that when we promote them, that we do it in a fair way. I think the challenge in this country, frankly, is that some people are arguing that expanding opportunity for people, including people who have historically been marginalized, is inconsistent with merit.

10:38And I think that's untrue. Oftentimes, people are allowed to believe this idea or urged to believe that this word diversity, which, of course, is a fact of life. I mean, our country's becoming more and more diverse. Now, that creates political tensions inside the country, and some politicians take advantage of the angst that that causes among certain subgroups of our population. But diversity is a fact. So the question is, how do companies take advantage of the best talent that is available in an increasingly diverse society? And, again, how do we expand opportunity for people who have been historically marginalized without discriminating against people who haven't been marginalized?

11:25I don't think those two things are at all inconsistent. To Ken's point, there was a letter written by the president of Princeton dealing with diversity and meritocracy was one of the subjects. And he said the Princeton of today is far better, is far more focused on merit than the Princeton of 50 years ago. And there is this myth that as a result of broadening opportunity, quality has gone down. That is not the case. Ken Frazier, if I remember correctly, you have a legal background, right? In this context, businesses are also grappling with increasing limitations, maybe legal risks about affirmative action in addressing historically marginalized communities.

12:18It's happening on campuses in the application process. Is that a dramatic change, a real risk? Are the legal risks things that business people are using as an excuse not to do things they want to do? I think it's a change in atmosphere for business. There are a number of organizations that have raised money and have begun bringing lawsuits against organizations claiming that their diversity programs discriminate against whites. That has changed. In other words, the Supreme Court's opinion has become a stimulus or a catalyst, if you will, for some of the groups that are totally opposed to diversity, equity and inclusion.

13:02You know, for both Ken and I, we're both born in the post-Brown versus Board of Education era. In my particular case, my younger sister and I, we were bused to better schools. So from the time I was seven, I was bused to the better schools in the Philadelphia area. I would make the argument that when you're looking at seven-year-olds, those who go to, let's call them under-resourced, failing schools, they don't go to those schools because they don't merit a better education. They go to those schools because of the circumstances of our society and the fact that many of these things, including race, continue to have an impact on generations following the end of legal segregation.

13:44So if you agree that every child should be given that opportunity, then I think it's pretty clear that business and our society really has an obligation to ensure that this conversation that we have about equality is more than a myth. Um, after George Floyd was murdered, you two helped co-found an organization 110 dedicated to creating a million new family sustaining jobs. And at the outset, these were a million new jobs for black Americans. You've since adjusted that to target broader beneficiaries. I'm curious why you made that change. How did that decision come about? Is that an example of the diversity process that maybe could be adjusted?

14:33Is there a connection there? So when 110 was formed, it was formed with the intent of closing the opportunity gap for Black talent that lacked four-year degrees. Because if you looked at the most recent sentences, 76 % of African Americans at age 26 did not have a four-year degree. But from the very beginning, we made the point that, one, we were never going to exclude anybody on the basis of race. And indeed, if you go around and look at these cohorts before the Supreme Court decision, you would see that they were largely black and brown people, but they weren't exclusively. And the second thing I would make this point is that when companies reassess their hiring criteria and ask themselves whether jobs really required the four-year degree or whether or not they should be focused on skills first, which is what we're really pushing at 110, when you make that change, you actually make that change for everybody.

15:31When you decide that this particular job should be based on certain experiences and skills, you're not just saying for African Americans. African-Americans may have been the impetus, and I think 110 has played a major role in moving forward the skills-first movement. But we've never taken the position that we wanted to exclude people on the basis of race, and we don't exclude anyone. Yeah. One thing I would add, in business, you adopt marketing strategies against particular segments. Then, in fact, you say, this could apply across the board. So not only did we have that view in the beginning, but I think it made sense to say, let's concentrate on this particular segment.

16:18But one of the things that's very important is this is a win-win. But I think what is unfortunate is to be put in a position where you have to defend giving opportunity to people, in fact, that have been marginalized. I certainly don't think I need to apologize for trying to give people opportunity who, in fact, have not had some of the opportunities that many people have been able to obtain. What I hear in you a little bit is almost like disbelief that there are people who have a different perspective on this. I don't have disbelief. I think one of the challenges that we have in our society in communicating across the broad divide is not only the fact that we have the situation where the extremes dominate the conversation.

17:16And, for example, social media directs people to talk only to people who agree with them and condemn the people who don't agree with them. A big thing that we have to learn to do in our society is to listen carefully. You can't change someone's mind, Bob, if you don't really understand how they see the world. And I think that these folks who believe that DEI is intrinsically racist may be either looking at bad examples of DEI as applied, or they've been told things that are basically untrue about DEI. So from my perspective, it's not a question of me saying I can't understand how they could think that way.

17:56I think it's about making sure that as business people, we are making the kinds of choices that support our businesses going forward. Again, we tend to take this sort of zero-sum approach to these opportunities when, in fact, there are 11 million jobs in this country that are unfilled because we can't find skilled people to do them. So I think it's really critical for us to make sure that people do understand why we're doing this the way we're doing it. Yeah, I think one thing, Bob, that is important, which Ken illustrated, is just as in a business strategy, it's very important for the CEO to give people context, to give people the rationale, to explain why diversity is important, and particularly in the environment that we're in.

18:49Bob, can I just say, you know, if you read Chief Justice Roberts' opinion in the admissions case, the point that he is making is one that if you look at it in isolation, you can't even argue with it. The point he's making is that colorblindness is the best governing and organizing principle for a pluralistic multiracial society. If you look at that as an abstract principle, it's almost irrefutable. The challenge is, of course, for 400 years, we've been anything but a colorblind society. And so the question is, when you think about what's the right, the most equitable, the most fair way to create access and opportunity in our society, one might argue that having the same finish line in the race doesn't make the race fair if people don't have the same starting lines.

19:53And I think what's important here is for people to understand that we want to make decisions in our companies that are based on people's excellence and merit. But we also have to look at the fact that many people, particularly at the hiring stage, have had to overcome a lot just to get to the starting line. And I also want to make the point, and this has been shown many other times, is that we have to recognize the impact of networks. In my own career, I was very fortunate to be hired by a prior CEO of Merck into a senior position. And the connections that I had with that person and subsequent CEOs are what positioned me to one day be CEOs.

20:40Those were social networks. What I would say is, as an African-American, my access to those senior managers was quite unusual compared to many of my colleagues. And I'm not saying that people are consciously discriminating, but they have to think a little bit about how social networking works and whether certain people have more access to the people who can make or break careers than other people do. That's often the case for women, and it's often the case for minorities in corporate America. What Ken and Ken are offering here are not just moral or altruistic positions, but practical, logical, effective business practices.

21:24They take a similar approach to the controversy over Israel and Palestine. After the break, we dive into the unrest on college campuses and what business leaders can learn about nurturing a culture of healthy debate. Stay with us. Real leaders don't back down when the stakes are high. They innovate, they push forward, and then they take the stage at the Masters of Scale Summit. Join us in San Francisco, October 7th to 9th, to hear from the CEO of the New York Times, scientists using cutting-edge technology to find cures, the leader of crypto powerhouse Coinbase, a retired four-star general, and many, many more.

22:06Apply now at mastersofscale.com slash apply25. That's mastersofscale.com slash apply25. If you're ready to take your startup from idea to impact, then AWS is your launchpad. From data storage to machine learning to secure app hosting, AWS gives you the tech trusted by the world's fastest scaling startups. And here's the best part. Join AWS Activate today and you could score up to$100 ,000 in AWS credits tailored to your stage and network. Go to aws.amazon.com slash activate and start building. Expanding your business in the U.S. can feel like a maze. Every state has its own payroll, benefits, and compliance rules, which can pull your focus away from growth.

22:57That's why founders use Deal. Deal is the professional employer organization, or PEO, that gives you a dedicated HR expert plus Fortune 500 level benefits for your team. The National Association of PEOs says businesses can grow twice as fast if they use one. So if you're scaling, make it simple with Deal. Go to deel.com slash MOS and get up to three months free. Before the break, former CEO of Merck, Ken Frazier, and former CEO of American Express, Ken Chenault, talked about when leaders should speak out on social issues and the relationship between affirmative action, inclusivity, and merit. Now the pair discuss the protests on college campuses over Palestine and Israel, the message for universities about what they're getting wrong, and what it all reveals about the next generation to enter the workforce.

23:52Let's jump back in. Among the board work that you do, you're both members of the Harvard Corporation. Is there a good way or a bad way to handle the agitation over Palestinian protests, anti-Semitism? How can we understand this moment? Are there lessons? Look, the reality is that we have a generation that has grown up with social media. and we don't have sophistication and nuance in our arguments. And also, very importantly, people aren't listening to each other, are not understanding why does someone have this opinion. We have a dispute that has gone on for thousands of years. From my perspective, I certainly believe in the state of Israel.

24:47There's no doubt about it. But the reality is that there are issues on the Palestinian side. And how are we engaged in civil dialogue and constructive dialogue? And I think the behavioral norms on college campuses is one is we need more civil discourse that takes place. We need behavioral norms of how do we treat each other? How do we talk to each other? So this is clearly a very complicated set of issues that we're facing. But I will tell you, Bob, that I think what we're seeing on the college campuses is a microcosm of what's happening in the broader society. And I think that I believe you're going to see universities changing some of their approaches because that's what you need to do when you're confronted with a set of challenges.

25:55But you have to be grounded in what the values are of the institution. You know, I heard someone say the other night on TV, if you've read 10 books about the origin of today's situation in Palestine, all that qualifies you to do is to read another 20 books. I thought that was well said. So a lot of the people who are taking strong positions, including, I think, some of our younger people, haven't read the first book, let alone the first 10 books. And I don't mean to be critical, but I do think, as Ken said, if you listen to the slogans that are being uttered, they sometimes lack nuance. And I think this chapter gives the colleges an opportunity to, in fact, rethink their social contract with society.

26:48At every stage, universities have to look at society and ask, are we forming the young people that are coming to us in a way to be constructive leaders in society? I think if you look at the campuses now, I think university leaders are probably questioning whether they are, in fact, adequately preparing young people to be leaders in this fractious, divided society of ours where people don't really understand each other. Common ground will never be reached unless we go to higher ground and talk about the principles that unite us. And if our leaders don't understand those principles and they can't put those principles into play, including the principles of open discourse and dialogue on the university campuses, I despair for where our society and the world are going to be in the next 20, 25 years.

27:41Yeah, I had this term that I used at American Express that I wanted people to engage in constructive confrontation, but to do it respectfully. And the reason why I believed in that was because I think we do need to debate and argue, and certainly on our college campuses, that's part of what you have to learn. but as Ken said, you have to understand the other person's perspective and you have to do it in a respectful way. And I think, frankly, this goes to, Bob, a broader issue that I think we're dealing with in our society is the importance of values and the importance of character and the importance of the respect that we need to have for each other.

28:32I also think it's fair, while we're taking the prerogative of older people to criticize younger people because we're jealous of their youth, I also want to make the point that among younger people, we have the same situation we have in the broader society. That is, the extremes monopolize the microphone. But 80 % of the people are in the middle, and they do want to work together. 80 % of the kids on these college campuses are working together. I heard stories recently about situations on campuses that are not even reported, like Jewish students having Seder and other students, including Islamic students, ringing around them, surrounding them, observing the Seder in a respectful way.

29:21and then Muslim students praying and Jewish students and other students creating that protective ring around. We don't hear those stories. And I think it's really important for us to understand. There's something hopeful about those stories to me, because I do believe that 80 % of the people want to engage in issues in a civil way. 80 % of the people believe that persuasion is more important than coercion. And Bob, can I say that out of this whole conversation, if I can, And there's a lesson for leaders in corporate America in this whole conversation. We live in turbulent times. There's a lot going on on the left, on the right, a lot of challenges to businesses.

30:06One of the keys is for leaders to spend time reflecting, not to instantaneously react to what's going on around them. to listen to others, to prompt others to give you feedback that can help you decide what the right course is. And by the way, implicit in that is being the kind of leader whose people actually trust you enough to tell you what they really think. Just as Ken was saying, students don't feel comfortable saying what they really think. That can be true in companies, that people don't feel comfortable in helping you to see the big picture, helping you to assign the right priorities to various actions that you might or might not take.

30:52So I do think there's a lesson not just for college students, not just for university leaders, but for all leaders, and that is whenever you're facing with these turbulent, challenging times, it's important to do some reflection before deciding what you're going to say or do. Yeah, I think it's the reflection and you need to be grounded in your personal values and beliefs and your company's values and beliefs. And sometimes that takes some bravery as well to act on those beliefs. Look, I think the reality is one of the most important attributes of an enduring leader is courage. I think that CEOs need to be courageous, not reckless, not foolhardy, but there are moments, particularly as a CEO, where you have to exhibit courage.